Perspective on family partnership/buyout investment

[Kate Pasinelli]

Looking for some perspective on a family dynamic investment situation.

Last year my parents/ husband and I partnered on a 12 unit apartment complex. I asked my parents to be active partners and he took out a Home Line of Credit to do so as we couldn’t afford to do it on our own. We made the decision that I could use half of the line of credit to invest and my brother could use the other half of the line of credit to invest with my parents on his venture if he so chooses. I had an amazing property fall in my lap due to my real estate connections (I’m an agent) and utilized the opportunity.

My husband and I own 70% and my parents own 30% of it. We all spent the last year renovating and updating multiple units and I ended up turning 4 units into Airbnb’s and making the building quite profitable. The original thought was that my brother and I have equal opportunity to invest $140k each of my dads line of credit and then in the end the properties that we invested on would be gifted to us and parents would make the cashflow while they were owners. We haven’t wrote the partnership agreement yet and my parents just updated their will and they wrote that when my parents pass the (30%) that they own, it would be divided in half and my brother would own 15% of my building. (I would prefer the first option to buyout before being forced into a partnership, but that’s not the way it was written)

I guess they are second guessing the gifting part of it in the end and that maybe my brother won’t utilize his opportunity and I have more opportunities and experience and they want it to be fair. It seems tough to swollow that now I will have to buy that back and such a higher price even though we have done all the work to increase the value. I understand that they want it to be fair, I’m just trying to get some perspective on if that’s the best way to do it or if anyone has done anything else.

Or if my dad just wants to sell, what’s the fairest way to figure out the buyout. New appraisal and buyout at the new increased value?

Thank you!